Layoffs spike and there's no end in sight

updated 7:11 p.m. ET Feb. 3, 2009

WASHINGTON - Layoffs are spiking as the recession rips through the country, with retailers, banks, factories and others cutting costs ever deeper this week. It's inflicting a painful toll on workers, and there's little relief in sight.

The latest round of pink slips and cost-cutting measures came Tuesday on the heels of tens of thousands of layoffs ordered by a slew of companies last week alone.

PNC Financial Services Group said it plans to cut 5,800 jobs. Liz Claiborne Inc., will eliminate 725 jobs, or 8 percent of its work force, one day after Macy's Inc. said it was axing 7,000 jobs, or 4 percent of its work force. King Pharmaceuticals Inc., will get rid of 520 jobs.

Military contractor and aerospace company Rockwell Collins Inc. is cutting 600 jobs and freezing salaries at last year's level for all executives and managers. UPS Inc. is freezing management pay and is suspending its matching contributions to employees' 401(k) plans. And General Motors Corp. said it will offer buyouts to all of its hourly workers.

With jobs vanishing at a breakneck pace, it's becoming increasingly difficult for the unemployed to find new jobs. And some of those who still have jobs are rapidly losing ground in other ways. Employers are freezing or cutting pay, trimming hours, suspending matching contributions to 401(k)s and doing away with health care, bonuses or perks that were offered during better economic times.

"Businesses are slashing jobs in order to survive in the deepening economic downturn," said Mark Zandi, chief economist at Moody's Economy.com.

All told, economists, on average, estimate that at least 524,000 more jobs vanished in January alone, and some think the figure will total around 600,000. The unemployment rate — now at 7.2 percent — is expected to jump to 7.5 percent, a 17-year peak, in January when the government releases new figures Friday.

In this job-killing recession, all workers — blue collar, white collar, those with advanced degrees and those with high-school diplomas — are feeling the pain. Rising unemployment is sparing no state or corner of the country.

Jobless rates were higher in a staggering 364 of the nation's 369 metropolitan areas in November compared with a year earlier. And a new report from the Labor Department due out Wednesday is likely to show equally grim results.

AP Jobs, spending data hint at recovery In a hopeful sign for the economy, the number of newly laid-off workers filing claims for unemployment benefits fell below 500,000 last week for the first time since January. New-home sales rise to highest level in a year Consumers log stronger-than-expected rebound Durable goods orders fall unexpectedly Recovery's pace slower than first thought

"A lot of people are realizing that once you lose your job, your expectation for being unemployed for a longer period of time is higher," said John Silvia, chief economist at Wachovia Corp. "That really adds to the tension in the marketplace and the degree of frustration among the unemployed."

The average time it took an unemployed person to find a job — full time, part time or otherwise — in December was 19.7 weeks, up sharply from 18.9 weeks in November, according to Labor Department figures.

Meanwhile, the number of "long-term" unemployed — those out of work for 27 weeks or more — jumped to 2.6 million in December, up from 2.2 million in November.

To help revive the economy and jump-start job creation, President Barack Obama is pushing Congress to enact a stimulus package of increased government spending, including on big public works projects as well as tax cuts. The House passed an $819 billion package; the Senate is working on an $885 billion plan.

Obama says his plan will save or create more than 3 million jobs over the next "few" years.

On Wall Street, investors set aside angst on the economy and took comfort in a rare uptick in housing activity. The Dow Jones industrials gained about 150 points in afternoon trading.

Looking ahead, economists predict up to 3 million jobs will disappear this year even if Congress quickly approves the stimulus package. The country lost a net total of 2.6 million jobs last year, the most since 1945, though the labor force has grown significantly since then.

The unemployment rate could hit 10 percent or higher later this year or early next year, under some analysts' projections.

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